This is my collection of ideas, opinions, and observations. My thinking follows Objectivism, MBT, Austrian Economics theory, and general observation. I hope you enjoy my writing and leave a civil comment.

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Thursday, November 23, 2000

Individual Trust Exchange System

I have been plagued with a thought. I suppose this is a good thing. But unless I write, draw and speak my mind, the thoughts plague me. This particular thought has been plaguing me for several weeks now. It is the culmination of my views of individual being, consciousness, free will, physics, metaphysics, freedom, money, banking and state.

That's a pretty big plague. Much of what I think of Freedom and individual rights come from Thomas Jefferson, the Constitution, and the writings of Ayn Rand. But last year I had an awakening. I read Thomas Campbell's "My Big TOE". Tom is a physicist, and a Big TOE is not a body part. It's a Big Theory of Everything. A Theory of Everything is a theory that attempts to explain Physical Reality. A Big Theory of Everything attempts to include Metaphysics, or Non-Physical Reality as well. It is in a way, a scientific view of what many people would refer to as God and Reality.

I'm not a religious man. I am a very spiritual man. I am a rational man. And Tom's work lead me to communicate with him directly via his web forum for the book. There I met his colleague and co-conspirator Ted Vollers. I had so many questions, and got loads of help in understanding what the Theory implies. And then I got more questions!

Basically, and I am paraphrasing, but basically, the Theory states that all of reality, both physical and non physical is consciousness. Ted came up with a model that uses a giant computer as a sort of analogy for the framework of consciousness and a method of operation. One of the key elements of this model is the concept of "rule sets" which define the conditions and interactions possible in any given physical reality and it's associated non-physical reality. A sort of machine to model Heaven and Earth.

I was bothered by this at first. And I questioned this model with both of them. I had problems with all sorts of things and to go into them all here would be to get away from the point I'm getting to. I'll post this material later. What is important to this post is the concept of the rule sets. It occurred to me, that if everything else that Ted and Tom had to say was true, that this big machine had these rules and that these rules defined the nature of the realities, one within another, and that this whole thing had been evolving since the very first conscious element came into being, then perhaps there is a single set of rules that underlie all other rule sets. I started looking for these rules, and I think I found them! Or at least some of them.

The One Rule Set search took me down some very interesting paths, both through physics, as well as metaphysics. What I discovered is that it is possible to "boil it all down" to two things, Time and Consciousness. All fundamentals have two aspects. In physics, this is seen as particle-wave duality. In the metaphysics of Being, it is the fundamental duality of Time and Consciousness.

Without going into the very long explanation of this here, I would urge you to read the books and view the lectures. I would urge you to read Heidegger's "Being and Time" and learn what the philosophical implications are concerning this duality. For now, for the purposes of this writing, I am going to state a few axioms and observations:

You are Being. You are processing Time. Your Future is not actual until you experience it. It can only be experienced by you. Once experienced, it becomes Actual, and is a part of the History of the world you exist in.
The world you exist in exists because you exist and you interact with it. Interaction is the source of knowledge and the reason for your being. All of this is as a subset of a much larger system of being that you are not directly aware of, but it may be directly aware of you.

Why are we here? The answer is to interact, learn, and lower the entropy of the system. Sounds simple, but the devil is in the details! And so is God, the creator. Lower entropy is more efficient and orderly, and has more available energy. Higher entropy is chaotic and in-efficient, and has lower energy available. It's like the difference between a tempest and a calm day. The potential energy of the calm day, is higher than the spent energy in the storm, so to speak. Why is all of this important? It's the basis of your being, nothing could be more important.

You are a collection of conscious fundamental particles, and conscious fundamental non-physical particles as well. There is proof of this in a famous experiment that puzzled Einstein and everybody else for years. It's called the Two-Slit or Double-Slit experiment. Bear with me, because you need to understand something of your being in order to proceed. Here is another great link to illustrate it.

The experiment was a simple one. They were looking at the nature of electrons, and trying to determine if they were particles or waves. So they thought, if they are particles, and you were to shoot them at a panel that had a slit in it, and on the other side of the panel was a screen, you should see a line on the screen. You do. Now if you replace the single slit with two slits, you should see two lines on the screen. You don't, instead you see what you would expect if the electrons were waves, an interference pattern. Head scratching commences and then they said, "Ok, maybe there are too many electron particles and they are bouncing off the edges of the slits and then each other on the other side." So they reduced the number of electrons down to just one at a time, and after a while, they got the same interference pattern. More head scratching commenced, because for this to be so, the single electrons had to split and pass through both slits! They thought, "We'll put detectors along side each slit, and record which slit the electron passes through." So they did, and low and behold, the interference pattern disappeared, and was replaced with the two lines they originally expected if the electrons were particles. More head scratching and serious contemplation commenced. Then they decided to turn the detectors off. The interference pattern came back! Physicists were floored. Then they turned the detectors back on and the lines came back. Turn them off and the interference pattern comes back.

That should have been enough, but then they tried one more thing. They left the detectors on, but left the readout un-recorded. In other words, they left the detectors in place and operating but did not record the results. The interference pattern returned! Look, and you see particles, don't look, and you see waves!

What they discovered, was that the electron has duality. It is a particle when you look at it. It is a wave otherwise. They discovered that your concious observation of the electron causes the electron to become a particle. Consious observation Actualizes the electron, changing it from a wave to a particle, from a potential to an object. Your consciousness has this same effect on every fundamental particle you know.

You are a conscious being. You are a collection of fundamental particles, quarks and electrons, photons. ALL of you is conscious. You have fundamental duality. You literally create the world around you as you are Being and observing. You have the power of creation in you, and the Two-slit experiment is a simple proof of that fact.

You also have Free-will. You can look, or not look. You can breath, or not breath. You can create, or not create. You decide.

Now we arrive at the beginning. I want you to consider the statement "WE hold these truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness...". Do you think this thought is new? Not me. Jefferson and the other founding fathers knew something of their place in this reality.

This power of creation, this ability to define our environment and it's manifestations, is derived entirely from our connection with, our being a part of, our creator. It is inherent and implicit in our Being.

So, as individuals, you and I are on equal footing in our right to create. So long as we do not impose our will on others, so long as we do not deny others their right to create, Live, Pursue Happiness etc. we are fine. We are on equal footing in the ability to process Time. To Live is to process Time. We are on equal footing to love and to trust, or not. We decide for ourselves, what world we will create, in each and every moment we spend looking.

We interact with each other. Sometimes the interactions are harmonious, other times they are not. We learn, and move on. But sometimes we are fooled. Sometimes there is deception, and the ruse is so subtle that we don't see it, even though we could, if we looked, we could change the wave of confusion, into a particle of truth.

One of the things we need to interact on a daily basis is money. But what is that? The truth is this; Money is the combination of your ability to Evaluate and your ability to Trust. What the money is made of is dependent upon your agreements. But what that money represents, is your Value, and your Trust, and the Value and Trust of the other individual you are interacting with.

We've come a long way as Human Beings. We've gone from simple Barter to Online Banking. This is a significant change in the perception of what is real as it relates to money. We've gone from physical exchange to non-physical exchange. Money has gone from being a physical commodity, to being a conceptual commodity. Money has duality.

It has Physical manifestation as well as non-physical manifestation. There is another form of the dual nature of reality that came to light in the search for the One Rule Set. Reality itself exhibits duality. Actual reality is the things that happened, and are still happening. Actuality has Objects. Then there is the Potential or wave aspect of reality, the Conceptual Reality, the non-physical Reality. These two modes of reality interact. The two-slit experiment shows clearly that they do. But there are Objects within the non-physical as well as potentials. Potentials are within the area of time and the future. They are wavelike in nature and only become objects when they are experienced. Potentials are not objective in the sense that they are measurable only as a probability or an instantaneous measurment in time. Calculus was invented to deal with potentials. Statistical analisys was invented to deal with potentials. Until they are experienced, they remain a probability, a measure of their potential. A great example that most people can wrap their minds around is electricity. Voltage is also refered to as Potential. Current is what you get when the potential to move electrons is supplied with an actual path for the movement, such as a light bulb and wires. Power or Work is done when the resistance of the path restricts the movement that is driven by the potential. The higher the potential, the greater the amount of work for a given resistence. The formula for current, voltage, and power is Potential times Current equals power. Potential divided by Resistance equals Current.

(If you are about to be struck by lightning, your hair stands on end from the voltage, the charge, the potential building up on your head. Once the potential reaches a high enough value, BOOM! You're fried. That was the current doing the work of frying your hide. Oops.)

But there are Objects within the non-physical that are constant. These constants are the archetypes of thought. Things of definite form without physical form. Such as the numbers and mathematics. The ideas of Truth, Trust, Value, Love, etc. These thoughts have a definate form, but they appear to have changing values and forms when we observe them in reality. The reason this is so is that we measure the real experience against the archetypical thought, not the thought against the reality! But here is a sobering thought: All measurements are a comparison of the objects in question to the objects of the non-physical archetypes. All of them, ultimately rely on the ideas and objects within Conceptual Reality.

What? Think about it. You can't measure anything without comparing it to a non-physical Concept! Even the ordinal numbers on the ruler you use to measure a sheet of paper has a conceptual base. the Geometry of straight lines, equidistant points etc. The equal distances between the marks are a comparison of the time it takes to get from 1 to 2 to 3 to 4 and so on. The longer the time, which is non-physical, the longer the distance, which is physical. Measure distances far enough and the measurement itself is done against time and velocity. Light-years are a measurement of distance, which is physical, as expressed as a velocity over time, in this case 300,000,000 meters/sec for one year.

Money itself is a non-physical object. The creation of money is also non-physical, and today, even the transfer of money from one place to another is in the form of electrons and their representation by numbers. I'm not saying that the money is not real. It is real. It's just not necessarily physical. What defines them, what makes them change from a wave into a particle, from a potential to an object is the act of measurement, the looking.

Now for the secret the banks don't want you to know. They have no special powers of money creation. Their abilities are not unique to their particular priesthood. You create money. I create money. We do this all the time. If we didn't, we would not be able to pay our bills and buy gas. You and I creat money by doing work. They create paper, and call it money, by decree, by Fiat. In physics, that is like writing down a voltage on a piece of paper and calling it a measurement. Bull Pucky!

The secret is in the Trust. We Trust that the money they make is real. We trust that the money they make has value. We trust that we can measure value with it, and exchange it for value. And what do we exchange? Things we want in our pursuit of happiness, and our Time. The products of our creation. The results of our Life and Liberty. What do we exchange? Value. Not money. Value. And it is made real by our Trust in our measurement of the Value. Money is the medium of exchange, not the measurement of the value! That is the secret the banks don't want you to know. Because if this is so, then ANYTHING can be MONEY!

But think about this. If you were to ask me what value I place on my time, I would give you a measurement in Dollars per Hour. Once upon a time, in a past life maybe, I would have given you a value in Ounces of Gold per Hour. The measure of my value, the measure of the value of my time, has gone from a comparison to a physical object to comparison to a non-physical object. But wait! There's more. The ruler, the measuring device called the Dollar, is changing value constantly and has no consistent worth or value of its own! At least the physical gold had consistency.

It is this changing of the measure, the non-physical basis of the money and the reverse mentality of value measurement that has led us to economic ruin. We are measuring ourselves with an inconstant measure! This is the same problem that has faced all of the civilizations of the past that have de-based their currency. They removed the basis of the value from the money, and thus altered the ability to measure value consistently throughout society. The Bible has quite a bit to say about this, as does the Koran.

Leviticus 19:35 ‘You shall do no wrong in judgment, in measurement of weight, or capacity. NASB95

Deuteronomy 25:13-16 “You shall not have in your bag differing weights, a large and a small. “You shall not have in your house differing measures, a large and a small. “You shall have a full and just weight; you shall have a full and just measure, that your days may be prolonged in the land which the Lord your God gives you. “For everyone who does these things, everyone who acts unjustly is an abomination to the Lord your God. NASB95

Proverbs 11:1 A false balance is an abomination to the Lord, But a just weight is His delight. NASB95

Proverbs 20:10 Differing weights and differing measures, Both of them are abominable to the Lord. NASB95

Proverbs 20:23 Differing weights are an abomination to the Lord, And a false scale is not good. NASB95

What does the two-slit experiment have to do with money? The experiment is an illustration of truth. It is the best truth telling machine ever made. When the experimenter measures an electron, the device shows the truth that a real measurement was made. It shows two vertical lines. If no measurement is known, then it shows an interference pattern. Something very similar happens in the economy when the measurement is no longer reliable. The money no longer exists as an object. It becomes a wave and the economic equivalent of an interference pattern shows up instead of the lines. The values we measure are only good in the moment, because even though the objects we measure are static in their way, the measuing device is corrupted in it's output over time. It is like weighing your self with a faulty scale!

I will explain it this way. Suppose you had a ruler that shows 12 inches. But this is a baseless ruler. The creators of the ruler figure that if the ruler shrinks a little bit all of the time, that everything will appear to get bigger. Sounds silly, but this is the thinking behind fiat money. You know, and everyone around you knows, that the measure is shrinking, but you measure with it anyway because it is the accepted standard. I know, stupid, but that is what we do. Now suppose that every now and then, the rate of shrinkage increases so that instead of losing an inch a year, the ruler starts losing an inch a month. This is what inflation does in the real world of fiat money. So the ruler has gotten too short to measure in inches any more so we start measuring in feet. Ok, so in the money world, instead of a cup of coffee for $1 we get a cup for $5, right? No problem. But the rate of shrinkage continues to increase, our ruler begins to lose feet per month, and eventually miles. Soon enough, the measuring device is no longer useful as a measuring device because it's value is changing faster than we can adjust. This is hyperinflation. It seems like a misnomer, but you have to realize that it's not the measuring device that appears to be inflating, it's the values we assign to the things we have measured with it that is inflating! Why? Because the device we are measuring with is shrinking! The numbers on it are the same, but it's dimension has changed relative to the static things we are measuring. Eventually we lose our trust in the measurement. Once the trust is gone, the measure is no longer valid. Measurement is no longer possible and the value becomes entirely probabilistic. If you are measuring with a probability, you are measuring with a wave or potential, not an object.

What we need is a scientific measuring device for value. One that makes measurements consistently, over time. We need one made of metal. But in the real world of money, we had such a measure and we replaced it with the incredible shrinking "ruler" of the fiat paper money. We got so used to the shrinking, that we devised new ways of computing values so that we could keep up with the measuring device always changing. We learned to move values around in ways that were more convenient and efficient than the physical ruler itself could provide. Going back to the metal ruler would not be a very practical thing to do because we have gotten used to the conveniences that we built to deal with the shrinking problem! Same thing is true of our real money world. But there is hope. One of the things we learned was that we don't have to have a physical ruler to move value! Nor do we have to have a physical ruler to take an accurate measurement. We didn't lose our ability to measure, on the contrary, we've expanded on our ability to measure, by necessity. What we lost was our ability to Trust the ruler!

So what is the solution to the problem we face today? We are heading into a future where the entire human community is facing the real probability of hyperinflation. All of the banks are creating more and more fiat money every day expecting the extra number of rulers to fix the problem of the rapid shrinking. But in the world of money, it is the act of creation of fiat money that is the direct cause of the shrinkage in the first place! Every time a new "Dollar" is created, the total number of dollars increases, and so the relative value of those dollars decreases. Money is a representation of real value, the value of my time and your time and the things we want and need in our pursuit of happiness. Creating more dollars to represent those things does not make more things! It only makes more dollars. And so the measuring device shrinks.

But now we can measure with a metal ruler without having to actually have a metal ruler. We have the ability to transfer value from where we are to anyplace in the world without having to physically move metal to do it. Our ability to evaluate is all we need to create our own value. What we don't have, individually, that the banks provided, was a means of trust. I don't know Joe Wong in Hong Kong, so there is no way for me to trust him. But the bank Joe uses in Hong Kong knows him, and my bank knows me, and the the two banks know each other through the banking system. This is a system of trust that allows me to do business with Joe, even though we don't know each other. But when the banking system loses trust in the currency, then the business can't be done because the trust has to be not only between the parties exchanging, but also in the measurement of the value, the medium of exchange.

But we don't need the banks for the value. We only need them for the trust. Unless there is a way to trust each other that does not involve any private or state run system to do it. If we can trust on an individual basis, with a system that always tells the truth, like our two-slit experiment does, then I don't need to know Joe personally, if the trust measurement device, or trust system always tells the truth and says Joe is an OK guy to do business with.

As far as value goes, all we need is a metal ruler that everybody can copy, and remains relatively accurate for us to use to measure value. We can use gold, as the measure, without having to actually have gold to measure with. So I can evaluate my time, my worth in ounces of gold per hour with out having to have any gold and I can sell you my time in ounces of gold per hour without recieving any gold either. We learned to do this already with dollars! I have never physically touched all of the dollars I deal with. I have only physically touched some of the dollars I deal with when I wanted physical money. So the idea of value exchange by measure without the standard of measurment being in my possesion is not an unfamiliar concept. It is a very real part of my existence, and yours. The value exchanged electronically, is very real. This is one of the valuable lessons we have learned in dealing with the absurdity of fiat money.

What I have devised is a method of trust exchange that solves the other part of the problem. I call it Individual Trust Exchange System or ITES.

ITES is about telling the truth, but only as much as is needed to have a reasonable amount of trust in an exchange. ITES is very basic. It is based on some of the rules I found when examining fundamental interaction. One of the rules is that the interaction is always between just two Objects. Even when you are interacting with a group, there is only you, and everybody else. ITES sees only one interaction, and that interaction either results in a good or mutually fair exchange, or it doesn't. ITES only ever tells the truth. And if an element within the system becomes corrupt, the system will stop trusting it. ITES never forces an exchange. ITES follows the rules of free-will exchange. All exchanges are voluntary. ITES is a system of open, honest, voluntary exchange. It is a trust system for pure laise-faire Capitalism.

One of the things I discovered in my studies is that Capitalism is the only economic system that places it's trust in the people at large. All of the other systems of exchange require a central authority to "control" and "enforce" exchange. Capitalism is the only form of economics that is compatible with free-will voluntary commerce.

Another thing I discovered was the self regulating nature of chaos. Free-will systems have chaos within them. They have appearent chaos, where the pattern is unrecognisable, and they have degrees of order that can appear more and more chaotic as the complexity of the system increases. But interesting things happen when the ordered states meet disordered conditions.

I mention this now because one of the arguments against laise-faire is the lack of "regulation". But the regulation comes from the form of the system, and the allowance of chaos. A very simple example of this principle of self regulation based on chaotic reaction can be found in the clothes washing machine in most households.

The washing machine system has a tub that will be filled with varying weights of wet clothes. And in order to remove excess water from those clothes, the clothes are spun. But it is not known ahead of time where the weight will be in the tub. There is no way to build the tub so that it is always balanced with any weight of clothes and any distribution of clothes within. So underneath the tub there are two fly weights, each one on an arm of differing length and attached to the same shaft as the tub. When the tub begins to spin, the weights begin to spin as well, but the tub and the weights are not fixed to each other. Only the tub is fixed to the shaft, the weights are allowed to swing and pivot where they will around the same shaft. And they do. Each weight swings is reaction to the weight of the tub and the clothes it has in it and each of the weights rotates differently, creating a chaotic movement that counters the chaos of the unknown weight of clothes. If you defeat the interlock on the washhing machine, (the manufacturer would advise you not to do this for your own safety, should you be an idiot or something equally dangerous), you can observe the tub spinning in wide circles at first and then finding a near perfect balance as it speeds up. It starts to center itself and the shaking decreases. This is the chaos of the free weights at work.

Another example is a glass of water. The molecules in the water are doing whatever the heck they want, when they want. They are exchanging ions, and bouncing around interacting like crazy. But the water as a whole, appears still. It has order, even though if you were to look at the molecules up close, you would see only chaos, from the molecules point of view. Free exchange amoung people has the same kind of chaos at the individual scale, but also the same kind of order on the community or larger scale. It is not a correct assumption that chaos at one scale translates to chaos at any scale.

So the need for regulation of individual aspects of economic exchange is an illusion of scale. Free markets will find their own centers, create their own balance, and correct themselves as they go. They will not always be right, but they will also not be constrained to remain wrong by law.

I would like to see what the contradictions are you are talking about is, but I don't. Jimbo is arguing against fiat and fractional reserve and debt accumulation and trade. I don't see a problem.

ITES is a 100% reserve system of sorts, based upon tangible value as held and supplied by the holders of elements.

Loans are possible, but must be redeemed to avoid flags for incomplete transactions.

The system is based upon a single unit, a single weight of gold. It can dynamically convert to any other form on the fly.

It is a sound money system, based on real tangible values, measured by a stable unit, and utilizing intangible device for the convenient movement of value, much as we do today with titles and deeds for houses and cars.

About Me

I think, therefore, I am...hungry.
I think:
Most People are Mostly Good, Most of the Time.
I think:
Some People are not like Most People.
I think:
The Free-market IS the people.
I think:
Blaming the Free-market for the trouble caused by the absence of freedom is scapegoating on a grand scale.